UK’s FCA bans MLM crypto investment schemes
The UK’s Financial Conduct Authority has announced
a crackdown on financial advertising amid concerns about “the ease and speed with which people can make high-risk investments”.
Of note is the banning of “refer a friend” commissions, which all MLM crypto schemes offer.
As per a June 8th press-release, the FCA advises;
Those marketing cryptoassets to UK consumers will need to introduce a cooling-off period for first time investors from 8 October 2023, under new advertising rules announced by the FCA.
‘Refer a friend’ bonuses will also be banned.
The cooling-off period is 24 hours, meaning UK investors in MLM crypto companies will have 24 hours to apply for a “no questions asked or strings attached” refund.
The banning of “refer a friend” bonuses however renders the cooling-off period moot for MLM crypto investment schemes.
Although they might not be called “refer a friend bonuses”, every MLM compensation plan pays some kind of commission on level 1.
When it comes to MLM crypto compensation plans, these are typically referral commissions or a matching bonus on earnings.
As previously noted, the FCA’s rules are coming into effect from October 8th.
Evening Standard reports the FCA took action because
politicians and regulators fret that too many Brits are getting into investments they don’t understand.
It’s no secret that BehindMLM has been heavily critical of the FCA’s inaction with respect to MLM securities fraud.
We took particular offense to the FCA refusing to regulate CashFX Group securities fraud, going so far as to include a general FCA warning when reviewing any MLM company representing ties to the UK.
The new FCA rules will live or die on enforcement. And, given the FCA’s track record, I can’t say I’m even remotely confident in the FCA’s ability to enforce its new rules.
As it stands, from October 8th any MLM crypto company operating in or soliciting investment from UK residents is illegal.
Anyone residing in the UK who is pitched on an MLM crypto company after October 8th is encouraged to file a complaint with the FCA.
BehindMLM will be monitoring whether the FCA takes any action on its new law (MLM crypto or otherwise).
If we don’t see anything in the first six months from October 2023, it’s safe to assume this is unfortunately more lip-service from UK authorities.
Couple of points.
– Reminds me of Telesales, i doubt companies running a scam will adhere to.
Ref “Friend Referrals”.
– It would be of concern if there wasn’t such a thing as the internet, most MLM’s are pushed by social media, opposed to a small % by localised friend suggestions – in the UK.
“Refer a friend” is getting paid to recruit someone into a crypto investment scheme. I believe the FCA have gone with simple terminology in light of “Brits getting into investments they don’t understand.”
A big part of the crypto grift is otherwise clueless morons feeling intelligent when they invest in crypto scams. This mentality can often be seen in BehindMLM’s comments.
MLM crypto schemes call “refer a friend bonuses” commissions but it’s the same thing. The only difference is MLM crypto schemes extend the commission/bonus down multiple levels.
Victims recruited into the schemes don’t need to be actual friends of the recruiter.
@ Tom
I’m not so sure. MLM parasites in the UK have mastered affinity marketing.
I’m Nigerian/Bangladeshi/Sri Lankan, or whatever so I market to people who look/pray/talk like me, etc, in a community.
Nobody is going to report a family member or respected member of the community, the victims can sometimes barely speak English if at all, might have a dodgy immigration status and therefore can’t complain or are entirely dependent on someone who believes.
Crowd1 and OneCoin nailed this in the UK. That’s why the majority of victims are from minority communities. The victims are voiceless.
Whether the Fundamentally Complicit Agency bothers to enforce anything will be the test
There are SOOOOO many crypto scams I think it’s highly unlikely the FCA could keep up.
It seems the regulators (Particularly in the US) are trying to cut off the ability for “punters” to move their assets from crypto to fiat and vice versa. The next few years will be interesting for those who have “invested” into crypto.
Sooo many crypto scams in UK! As example, GS Partners holding a big event in London on Saturday to sucker more desperate individuals into their scam!
“Refer a friend?” Don’t they really mean “…refer anybody?” lol.
“Refer someone you steal from” if they wanted to be accurate.
You are more than two months late, but not a bad April Fools joke.
The FCA doing their job, let alone adding more to their job?
Not going to happen.
Dubai will ban scammers before the FCA actually do their job.
In New Zealand, you can’t give financial advice to anyone unless you are a regulated financial advisor. It sounds like this was already the case, but not enforced. So, what is the point?
Hopefully, this is a step in the right direction for the UK’s FCA. It’s still a bit breathtaking that they could actually offer financial advice for an unregulated currency.
The first thing I tell people if they want to get their money back is to go after the sponsor for providing financial advice when they’re an unregulated financial advisor. Hopefully, this will make it easier for people.